7/27/2014

Downsizing

Somehow I missed this excellent article in the Wall Street Journal about downsizing and the difficulty is selling certain types of furniture and collectibles. This is similar to the article I posted back in June on the falling values of some sectors, and family members being shocked when they hear the low values of items they thought may be priceless (click HERE to read the earlier post).

As I have mentioned in past posts, these types of articles are excellent resources when discussing value expectations with clients. It is important as appraisers that we keep our clients informed, and prepared for values which in certain instances may be much lower that expected.

The article points at something similar to what I tell estate representative and downsizing clients, sometimes it is important to get rid of the content, rather than trying to maximize value. This is especially the case when there is valuable real estate to be marketed and sold. This WSJ article has excellent examples of the difficulty some collectors have had in downsizing and liquidating property.

The Wall Street Journal reports

After his son went off to college in August, Craig Norberg-Bohm was ready to downsize. In less than two weeks, he sold his five-bedroom home and bought a three-bedroom. But almost a year later, he is still trying to get rid of his extra furniture.

Friends have been through to cherry-pick the contents of the 62-year-old's Arlington, Mass., home. He put shelves, a childhood dresser and other furniture in storage. Now, with his moving date approaching fast, he is still looking for a home for four bookshelves, two bedroom sets, two desks and a dining room set.

"Nobody wants a pingpong table," says Mr. Norberg-Bohm, a community educator for a Boston nonprofit.

Whether moving to a smaller abode or simply cleaning out, many people are making an unwelcome discovery: Their prized family heirlooms have turned into junk. Upholstered sofas, formal dining tables and hutches, Victorian-style mahogany and oak furniture, entertainment units, bulky television sets, pianos—all have become almost impossible to sell or, in some cases, give away.

The furnishings industry has a name for the big, dated wood-finished and upholstered pieces that no one wants anymore—"brown furniture." Stockpiles of "brown leather and brown Ultrasuede couches have nowhere to go," says Jeffrey Brooks, a Long Valley, N.J., interior designer.

What happened to the market for secondhand furniture? Those consumers are shopping at Ikea, Wal-Mart and Target, says Jerry Epperson, a partner at Mann, Armistead and Epperson, a Richmond, Va., investment bank specializing in the home-furnishings sector. The cost of furniture, in constant dollars, has fallen on average about 50% over the past 30 years, he says, the result of the availability of cheaper imports.

Even the Salvation Army, known for making furniture pickups, has become pickier in recent years, says Major Greg Davis, a general secretary at the nonprofit. Delivery-truck drivers began carrying Internet-enabled tablets about two years ago. When in doubt, they take a quick photo of a piece and send it ahead to the local store to make sure it will be accepted. Many shelving units are turned away, he says, as are pianos and badly torn or stained upholstered furniture. Still, the volume of furniture delivered at Salvation Army centers is growing by about 4% a year, Major Davis says.

When locating from full-size suburban houses to townhomes, many people realize too late that their old furniture will be an awkward fit, says Mr. Brooks, the interior designer. Design elements in new construction, including kitchen islands, built-in shelves and the lack of formal dining rooms help make older furniture feel dated. The sizes are all wrong, he says. "Everything had been scaled for bigger spaces."

Many homeowners moving to smaller abodes with new dimensions and built-in features find they have no use for prized pieces—including, clockwise from upper left, home-workout equipment, dining room sets, armoires, pianos, media and home-entertainment units and wood-finished dressers—and neither does anyone else.
For homeowners in a rush, Kate Grondin, who owns Home Transition Resource, of Andover, Mass., has a procedure. First, she advises homeowners to use email and social media to put out the word to friends and family that they have stuff they want to sell or give away. Then, she invites in antiques dealers to pick through the most valuable items. Next she brings in local consignment-store owners to assess other salable items, such as mid-century and industrial-style furniture, Oriental rugs, informal kitchen tables, art, side tables and yard equipment.

After that, she tries to donate items to local nonprofits. Finally, she posts pieces on Craigslist, offering them at no charge—as long as the taker comes to get them.

While clients may get anywhere from several hundred to several thousand dollars for their belongings, the cash isn't the most important thing, she says. "Just having it gone is worth a lot," says Ms. Grondin who charges hourly and often gets $3,000 to $4,000 for the average home. She often warns clients to expect their children to have little-to-no interest in the stuff.

Janet Sharp Kershaw, 55, has spent two years downsizing in hopes of moving from her three-bedroom Winchester, Mass., home to an apartment in Boston or New York this year. "It was very tedious," she says. At one point, she dialed a junk-removal service, and two delivery men helped her fill a dumpster with unwanted items. They charged $800.

Looking back, she says she regrets throwing away several decorative doors and three rugs. "It made me feel terrible," she says. "I should have been able to give them away to someone who needs them." Since then, she has learned about Freecycle.org, where users unload unwanted things to others at no charge.

Three months ago, Ms. Grondin helped Ms. Sharp Kershaw contact specialty dealers to pare down her collections of china and silver, antique furniture, artwork and outdoor accessories. She sold an antique dining hutch purchased 15 years ago for $5,000 to an antiques dealer for $3,500. A local secondhand furniture shop gave her $500 for a bulky horizontal dresser she bought 10 years ago for $2,500. After two months of trying to sell an antique sleigh bed she bought five years ago for $3,000, she gave it away to a nonprofit.

Maureen Spriggs cleared out a 20-year stockpile of furniture from her Wilmette, Ill., home. It saved time to hire a third party for the sorting. Otherwise, she says, the tendency would have been to "build a three-act play" around each item. The company she hired was an "eco-cleanout" specialist, meaning they sell or recycle but don't throw things away.

Ms. Spriggs agreed to donate holiday decorations to a nonprofit. "You can't imagine how wonderful it is that I don't have 87 pieces of Christmas decorations stuffing up my garage," she says. She gave a rarely used sage-green sleeper sofa, Prairie-style end tables, an ottoman and two lamps to her administrative assistant at the real-estate office where she works. The co-worker sent her a photo of her new living-room setup and a handwritten thank-you note.

An efficient secondhand-furniture market would actually help new-furniture sales, some retailers say. Doug Wolf, co-owner of Wolf Furniture in Altoona, Penn., started Allegheny Consignment, a consignment-shop chain where shoppers are encouraged to consign old pieces after purchasing new ones at Wolf. "We get two sales from the same customer," says Mr. Wolf. He has two Allegheny stores open and plans for a third in fall. Allegheny gets 50% of the secondhand sales. Consignors earn an average of $200 per sale, he says.

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The Appraiser Workshops blog was developed in 2008 to publish news connected with the personal property profession and to promote the Appraiser Workshops. Content includes appraisal ideas and tips, industry news and events, market trends and updates, surveys, educational opportunities and general commentary about personal property appraising. Visit often. Comments, news, suggestions and content contributions are always welcome.

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Todd W. Sigety, is a certified member of the International Society of Appraisers and is a partner in the Appraiser Workshop, developers of the Good, Better, "Best" Appraiser Workshop. He owns two Antique galleries in Old Town Alexandria, VA where the workshop is held. He currently serves as the President on the National Board of Directors for the International Society of Appraisers. He is also the creator and editor of the Journal of Advanced Appraisal Studies.

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